Audit Evidence Flashcards
What is the purpose of audit evidence
necessary to support the practitioner’s opinion and audit report.
cumulative in nature
primarily obtained from audit procedures performed during the audit.
Can be supportive or contradictory
What are the requirements of Audit evidence
Needs to be both sufficient and appropriate
What is you can’t obtain sufficient and appropriate evidence related to all accounts
Issue a disclaimer of opinon
what is sufficient
Quantity of audit evidence required.
The higher the assessed risks, the more audit evidence is likely required
higher the quality of evidence fewer evidence needed
What is appropriateness of audit evidence?
appropriateness is a measure of the quality of audit evidence obtained
higher the relevance and reliability of evidence gathered through procedures more appropriate the evidence
relevance = connection between assertion tested and evidence obtained
reliability - depends on the source, nature and circumstances
What are the types of audit evidence?
Physical evidence (such as the result of physically examining a tangible asset)
Confirmation evidence (such as from obtaining written communication from a third party)
Documentary evidence (such as from inspecting the client’s internal or external documents and records)
analytical evidence (such as the result of performing ratio analysis on the client’s balance sheet)
Why is audit evidence persuasive rather than conclusive
Because you do audit sampling and can’t test 100% of the population
Because evidence gathered is not 100% reliable
What are the three sources of evidece
Internally generated
Externally generated but held by client
Externally generated
Internally Generated evidece
Least persuasive and least reliable
Client can manipulate or create fictitious docs
Externally generated evidece
most persuasive and most reliable
little chance of manipulation or alteration by client
